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R. Fink | Direct hardware sales are Texas toast

The Packet Rat

By R. Fink

May 04, 2007

Illustration by Michael J. Bechetti

For ages, he has stayed the course, sticking to the plan even as ground has been lost. Despite making incremental adjustments, he has stayed close to his original battle plan even though he has had to dispose of scandal-tainted lieutenants stinking of failure.

He is Michael Dell, chairman and chief executive officer of computer maker Dell.

'Whom did you THINK I was talking about?' the Rat inquired of the hostile eyes surrounding him in a rural Texas bar. The cyberrodent was in the land of Shiner Bock, waiting to meet his Austin contact and learn more about the sea change building within the company.

Michael Dell had thought his fight was over until he had to let his own replacement go and come back to run the company, which has stumbled behind Hewlett-Packard as the leading PC maker. In a time of uncertainty about how the desktop and laptop PC market will fare and with declining margins on hardware across the board, Dell is now saying the direct-sales course that made the company famous is not religion.

'That's like Justice Scalia saying the Constitution is open to interpretation,' the cyberrodent said with a shake of his head. 'Like Vince Lombardi saying that when the going gets tough, maybe the tough should stay home.'

Dell has carried the direct-sales approach over to its federal operations, and the model has worked relatively well in the era of indefinite-delivery, indefinite-quantity mega-contracts. But with more server sales linked to services, the direct-sales giant is having trouble making the profitable sales into the data center.

HP, on the other hand, has the advantage of having built relationships with solution providers who know how to do that sort of thing ' and properly bill for it.

But now Dell is examining new ways to reach the market, even partnering with a retailer. 'Just the right tactic to lose more money,' the wire biter ranted. 'Maybe they should consider finding a way to get a carbon dioxide offset credit for dropping PCs into the ocean.'

By now, the gathered lynch mob had been subdued, or at least stupefied. The Rat returned to his Ovaltine unmolested.

The cyberrodent's Austin contact slid into the honky-tonk, looking at the crowd slowly dispersing from the vicinity of his furry friend. 'So, what makes you so popular all of a sudden?' he asked.

'These folks seem mighty sensitive for some reason,' the Rat said. 'They acted like I was talking trash about the president or something.'

The Packet Rat once managed networks but now spends his time ferreting out bad packets in cyberspace. E-mail him at rat@postnewsweektech.com.